Cannabis Bioscience International Holdings, Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY’S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS, THE NOTES THERETO AND THE OTHER FINANCIAL INFORMATION APPEARING IN THIS REPORT. Introduction The financial data discussed below are derived from the unaudited consolidated financial statements of the Company as of November 30, 2023, which were prepared and presented in accordance with United States generally accepted accounting principles for interim financial statements. These financial data are only a summary and should be read in conjunction with the unaudited financial statements and related notes contained herein, which more fully present the Company’s financial condition and operations as at that date, and with its audited financial statements and notes thereto contained in its Registration Statement on Form S-1 (File No. 333-267038), which was declared effective on December 5, 2023. Further, the Company urges caution regarding the forward-looking statements which are contained in this report because they involve risks, uncertainties and other factors affecting its operations, market growth, service, products and licenses that may cause the Company’s actual results and achievements, whether expressed or implied, to differ materially from the expectations the Company describes in its forward-looking statements. General Statement of Business The Company, headquartered in Houston, Texas, conducts clinical trials for Sponsors and CROs and as a Sponsor through Alpha Research Institute and cannabis-related education in classrooms, seminars and online through Pharmacology University Going Concern Going Concern As indicated in Note 3 of the notes to the audited consolidated financial statements for the year ended May 31, 2023, and the report thereon of the Company’s independent auditing firm, there is substantial doubt as to the ability of the Company to continue as a going concern. The Company has incurred recurring losses and recurring negative cash flow from operating activities and has an accumulated deficit, and its ability to continue as a going concern depends on the successful execution of its operating plan, which includes the resumption of services that were interrupted by the COVID-19 pandemic, increasing sales of existing services and introducing new services, as well as raising either debt or equity financing. The Company needs substantial additional capital to fund its business, including the completion of its business plan and repayment of its debts. No assurance can be given that any additional capital can be obtained or, if obtained, will be adequate to meet its needs, and the Company may need to take measures to remain a going concern. If adequate capital cannot be obtained on a timely basis and satisfactory terms, the Company’s operations could be materially negatively impacted, or it could be forced to terminate its operations. Impact of the Covid-19 Pandemic The COVID-19 pandemic has adversely impacted the Company and its financial results in different ways, depending on the particular business operation, as follows: Pharmacology University Business . The Company encountered quarantines, restrictions on gatherings and other governmental regulations that precluded classroom education, as well as restrictions on travel that reduced consulting activities. The Company reduced the impact of the pandemic by developing online educational programs and transitioning its workforce to a remote working environment without reducing its workforce. Revenue from this operation was increased from $18,323 in the year ended May 31, 2019 (unaudited), to $44,799 and $38,440 in the years ended May 31, 2020, and May 31, 2021, respectively; revenue for the year ended May 31, 2022, was $18,341 and for May 31, 2023, was $42,655. Revenues of this business for the three months and six months ended November 30, 2023, were $1,925 and $1,925, respectively, compared with revenues for the three months and six months ended November 30, 2022, of $5,949 and $15,864, respectively. 17 Clinical Trials . Quarantines, restrictions on gatherings and other governmental regulations, amplified by potential patients’ fears of contracting COVID-19 at the Company’s clinics, negatively affected clinical trials. In addition, these clinics were subject to closure if cases of the virus were detected. Revenue from this operation changed from $165,666 in the year ended May 31, 2019 (unaudited), to $84,979 and $706,008 in the years ended May 31, 2020, and May 31, 2021, respectively; revenue for the year ended May 31, 2022, was $196,637; revenue for the year ended May 31, 2023, was $266,280. Revenues of this business for the three months and six months ended November 30, 2023, were $52,010 and $102,993, respectively, compared with revenues for the three months and six months ended November 30, 2022, of $70,750 and $188,496, respectively. The Company believes that it may have been negatively impacted by the association of the pandemic with the People’s Republic of China because “China” appeared in its former corporate name. Although the Company has no operations in or any relationship with China, the Company believes that potential investors may have been deterred from considering the Company because of concerns related to that country. For this reason, and because the Company’s corporate name does not reflect its activities, it changed its name to Cannabis Bioscience International Holdings, Inc. on December 6, 2022. Results of Operations Comparison of the Three Months Ended November 30, 2023, and November 30, 2022 The following table sets forth information from the statements of operations for the three months ended November 30, 2023, and November 30, 2022. Three Months Ended November 30, 2023 2022 Revenues $ 63,748 $ 82,581 Cost of revenues 15,092 7,090 Gross profit 48,656 75,491 Total operating expenses 143,168 (259,099 ) Operating loss (94,512 ) (183,608 ) Non-operating income (expense): Interest (29,916 ) (36,278 ) Other income – – Net loss $ (124,428 ) $ (219,886 ) Revenues Revenues were $63,748 and $82,581 for the three months ended November 30, 2023, and November 30, 2022, respectively. The decrease was primarily due to a $18,740 decrease in revenues from clinical trials sales. Cost of Revenues Cost of revenues for the three months ended November 30, 2023, and November 30, 2022, were $15,092 and $7,090, respectively. The difference was primarily due to a $8,002 reduction in cost of revenues in clinical trials. 18 Total Operating Expenses The following table sets forth total operating expenses for the three months ended November 30, 2023, and November 30, 2022: Three Months Ended November 30, 2023 2022 General and administrative $ 8,407 $ 20,969 Contract labor 46,326 189,158 Professional fees 45,028 16,022 Officer compensation 12,000 13,500 Rent 31,210 17,902 Travel 197 1,548 Total operating expenses $ 143,168 $ 259,099 Total operating expenses were $143,168 and $259,099 for the three months ended November 30, 2023, and November 30, 2022, respectively. The decrease is attributable to a reduction of $142,832 in contract labor, offset by an increase of $29,006 in professional fees. A significant portion of professional fees was incurred in connection with the Company’s Registration Statement on Form S-1, which was declared effective on December 5, 2023. Operating Loss Operating loss decreased from $183,608 for the three months ended November 30, 2022, to $94,512 for the three months ended November 30, 2023, primarily due to a decrease in contract labor of $142,832. Other Income (Expense) For the three months ended November 30, 2023, and November 30, 2022, interest was $29,916 and $36,278, respectively. Net Loss Net loss for the three months ended November 30, 2023, was $124,428 versus $219,886 for the three months ended November 30, 2022, for the reasons described above. Comparison of the Six Months Ended November 30, 2023, and November 30, 2022 The following table sets forth information from the statements of operations for the six months ended November 30, 2023, and November 30, 2022. Six Months Ended November 30, 2023 2022 Revenues $ 136,569 $ 219,162 Cost of revenues 23,912 53,324 Gross profit 112,656 165,838 Total operating expenses 380,839 (589,443 ) Operating loss (268,182 ) (423,605 ) Non-operating income (expense): Interest (38,035 ) (49,978 ) Other income – 41,666 Net loss $ (306,217 ) $ (431,917 ) 19 Revenues Revenues were $136,569 and $219,162 for the six months ended November 30, 2023, and November 30, 2022, respectively. The decrease was primarily due to a $82,593 decrease in revenues from clinical trials sales and a decrease of $4,024 in revenues from cannabis-related educational classes and seminars. Cost of Revenues Cost of revenues for the six months ended November 30, 2023, and November 30, 2022, were $23,912 and $53,324, respectively. The difference was primarily due to a $29,412 reduction in cost of revenues for clinical trials. Total Operating Expenses The following table sets forth total operating expenses for the six months ended November 30, 2023, and November 30, 2022: Six Months Ended November 30, 2023 2022 General and administrative $ 53,376 $ 53,505 Contract labor 141,980 363,007 Professional fees 107,422 108,144 Officer compensation 24,000 25,500 Rent 52,163 36,148 Travel 1,898 3,139 Total operating expenses $ 380,839 $ 589,443 Total operating expenses were $380,839 and $589,443 for the six months ended November 30, 2023, and November 30, 2022, respectively. The decrease was primarily attributable to reductions of $221,027 and $722 in contract labor and professional fees, respectively. Operating Loss Operating loss decreased from $423,605 for the six months ended November 30, 2022, to $268,182 for the six months ended November 30, 2023, primarily due to a decrease of $221,027 in contract labor. A significant portion of professional fees was incurred in connection with the Company’s Registration Statement on Form S-1, which was declared effective on December 5, 2023. Other Income (Expense) For the six months ended November 30, 2023, and November 30, 2023, interest was $38,036 and $49,978, respectively. During the six months ended November 30, 2023, the Company recorded income of $41,666 from forgiveness of a loan. As a result, other income (expense) for the six months ended November 30, 2023, and November 30, 2022, showed losses of $38,036 and $8,312, respectively. Net Loss The net loss for the six months ended November 30, 2023, was $306,217, versus $431,917 for the six months ended November 30, 2022, for the reasons described above. 20 Changes in Financial Condition and Results of Operations At November 30, 2023, the Company had $337 in cash and cash equivalents and accounts receivable of $19,403, negative working capital of $640,567 and no commitments for capital expenditures. At May 31, 2023, the Company had $8,913 in cash and cash equivalents and accounts receivable of $10,549, negative working capital of $366,085 and no commitments for capital expenditures. The Company had cash and cash equivalents of $791 on the date of this Report. During the six months ended November 30, 2023, and November 30, 2022, the Company had net cash used in operations of $295,867 and $509,337, respectively, and net cash provided by financing activities of $287,291 and $501,444, respectively. During the years ended May 31, 2023, and May 31, 2022, the Company had net cash used in operations of $898,367 and $870,704, respectively, and net cash provided by financing activities of $875,298 and $861,364, respectively. The Company had accumulated deficits of $4,988,956 at November 30, 2023, and $4,682,736 at May 31, 2023. Impact of the COVID-19 Pandemic As indicated elsewhere in this report, the Company was materially and adversely impacted by the COVID-19 pandemic. With the lifting of the restrictions imposed in response to the pandemic, the Company is resuming normal operations in its Pharmacology University and Alpha Research Businesses. Off-Balance-Sheet Arran g ements The Company has no off-balance-sheet arrangements. Recent Accounting Pronouncements Refer to Note 2 of the accompanying financial statements. Item 3. Quantitative and Qualitative Disclosures About Market Risk. The Company is a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and accordingly is not required to provide information under this item.